Advance Payments Code

Advance Payments Code

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Author: Paul Weeks

The Advance Payments Code provides a protection mechanism for local highway authorities to ensure that they are not unexpectedly required to meet the costs of new roads that were not intended to be maintained by the public purse.

A local highway authority can serve a notice seeking the payment of, or security for, the estimated cost of construction for the private streets in a development (an APC Notice). It is a simple idea, but the applicable legislation (ss 219 -225 Highway Act 1980) is surprisingly complicated and can cause problems.

The implications of the Advance Payments Code

The implications of the Advance Payments Code should therefore be borne in mind when considering the construction timetable. The impact of the Code is usually relatively limited due to the common use of Section 38 Agreements, which negate the need for an APC Notice to be served.

The Advance Payments Code is enforced more strictly in some areas than others. Where it is enforced and it is not possible to secure a Section 38 Agreement before starting work, a bond or deposit for the estimated cost may have to be provided.

This is most likely to occur if there is a delay in agreeing the Section 38 Agreement, which is fairly common. The key points in the process are as follows: 

  • an APC Notice has to be served within six weeks of the building regulations drawings being passed by the local planning authority. It is served on the party that submits those drawings, but the obligation to comply with it is the responsibility of the landowner 
  • the legislation requires it to be the total cost of the works for the whole street and specifically states that a street does not include a part of a street, unless it is a part of a street which the street works authority think fit to treat as a separate street 
  • it is possible to challenge the amount sought by way of appeal, but that is not a quick process and the local highway authority's estimate would need to be significantly flawed to make this worthwhile 
  • starting work on the erection of a building which will front a private street without complying with an APC Notice is an offence liable to a fine not exceeding £1000. This is not a one time offence however, as each time works are carried out a repeat offence is committed unless the APC Notice has subsequently been completed

What are your options?

If an APC payment or bond is necessary in order to proceed with the development, then the amount sought is the key concern. Bonds can be expensive and as the bond will not be returned until the street works have been carried out - and it may not be known when that will happen - the costs can be considerable.

Alternatively, a cash deposit could be locked away for an extended period of time. Some options to consider if it is necessary to comply with an APC Notice include: 

  • can the cost be reduced because the estimate is flawed? Note an appeal can only be made within one month of receiving the notice 
  • can the cost be broken down in agreement with the local highway authority i.e. if the notice relates to all the roads in a development, can there be separate bonds for each street or for parts of the street? 
  • consider the exemptions in section 219. Some are automatic and others are at the discretion of the highway authority. They apply in quite limited circumstances but are always worth exploring

The Advanced Payments Code can work perfectly well - and is often unnecessary - but if a highway authority chooses to enforce it and there is a hold up with the Section 38 Agreements, then it can become an additional and quite possibly unforeseen cost. The plans for the new roads therefore need to be considered early enough in the process to avoid potential costs and delays.

About the author

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Paul Weeks

Senior Associate

03700 86 6865

Paul is a senior associate in Shoosmiths' planning team. He has experience of a wide range of planning and highways issues with significant experience in residential development. He advises a broad client base including house builders, developers and local authorities.

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